Speculation in exchange markets is often thought of as conducive to wild fluctuations in exchange rates. In practice it appears that speculators
A. have destabilized several currencies that were at sustainable equilibrium levels.
B. have no effect in fixed rate systems.
C. in fact tend to stabilize exchange rates rather than destabilize them.
D. All of the above are correct.
Answer: C
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A long term goal of the NAFTA member countries is to integrate their economies into a single economic entity with a common currency as well as common trade policies and internal factor mobility
Indicate whether the statement is true or false
If real extraction costs do not change, the relative price of a finite resource would be expected to
a. fall over time. b. remain constant over time. c. rise at a rate given by the nominal rate of interest. d. rise at a rate given by the real rate of interest.
Economic models
a. are people who act out the behavior of firms and households so that economists can study this behavior. b. are usually detailed replications of reality. c. incorporate simplifying assumptions that often contradict reality, but also help economists better understand reality. d. are useful to researchers but not to teachers because economic models omit many details of the real-world economy.
The production possibility frontier represents all of the combinations of different goods and services that the economy is capable of producing at a given time.
Answer the following statement true (T) or false (F)